2Q12 ALFA, S.A.B. DE C.V. ALFA reports a 10% EBITDA increase yearon year. Monterrey, N.L., Mexico. July 16, 2012. ALFA, S.A.B. de C.V. (ALFA) one of Mexico s leading industrial companies, announced today unaudited results for the threemonth period ended June 30, 2012. ALFA continued to benefit from favorable industry conditions and management s successful execution of its business strategy to report another solid quarter. 2Q12 results reflect improvements in the profitability of our high tech aluminum auto parts and food businesses, while petrochemicals and telecom reported strong results. Furthermore, we continued to make progress in the development of our hydrocarbons venture, achieving positive results, said Alvaro Fernandez, ALFA s President. During 2Q12, ALFA invested U.S. $373 million in capital expenditures and the acquisition of J.L. French Aluminum Castings Inc. ( J.L.French ) a company dedicated to the production of aluminum transmissions. Investment in fixed assets was made to modernize and expand capacity, particularly the auto parts business. However, the most relevant event of the quarter was Alpek s IPO. The subsidiary raised the equivalent of U.S. $795 million through the placement of approximately 18% of its capital stock. Proceeds will be used to finance Alpek s growth plans and to reduce debt. Mainly as a result of the IPO, consolidated Net Debt decreased by U.S. $435 million when compared to 2Q11. As of the end of the quarter, ALFA s financial ratios were: Net Debt to LTM EBITDA of 1.8 times, and Interest Coverage of 5.6 times. ALFA reported a Majority Net Income of U.S. $112 million in 2Q12, down from U.S. $166 million in 2Q11. The reduction in net income was mainly the result of the 15% peso depreciation year over year, which resulted in foreign exchange losses that more than offset the positive results derived from the operating improvements. Selected Financial Information (U.S. $ Millions) Ch. %. Ch. % YTD YTD YTD % 2Q12 1Q12 2Q11 vs. 1Q12 vs. 2Q11 12 11 Chg. Consolidated Revenues 3,832 3,792 3,824 1 0 7,624 7,307 4 Alpek 1,913 1,896 1,887 1 1 3,809 3,560 7 Nemak 928 920 943 1 (2) 1,848 1,835 1 Sigma 857 840 862 2 (1) 1,698 1,650 3 Alestra 86 89 98 (4) (12) 176 193 (9) Newpek 20 20 9 1 132 41 15 181 Consolidated EBITDA 483 462 438 5 10 945 841 12 Alpek 201 195 208 3 (3) 396 386 3 Nemak 130 120 97 8 35 250 199 26 Sigma 120 107 106 13 13 227 202 12 Alestra 31 41 33 (25) (7) 72 65 11 Newpek 16 14 6 8 170 30 10 209 Majority Net Income 112 243 166 (54) (33) 355 360 (2) Capex & Acquisitions 373 132 94 183 297 505 825 (39) Net Debt 3,109 3,648 3,544 (15) (12) 3,109 3,544 (12) Net Debt to LTM EBITDA.* 1.8 2.2 2.0 Interest Coverage* 5.6 5.4 6.2 * LTM: last 12 months for 2Q12 & 1Q12. Annualized for 2Q11. CONTENTS Consolidated Section 2 Nemak 5 Sigma.. 7 Alestra... 9 Newpek... 10 Appendix A & B, Tables. 11 Appendix C Alpek s 2Q12 Report.. 22 This release contains forward looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information based on International Financial Reporting Standards (IFRS) in effect in Mexico beginning January, 2012. For comparison purposes, 2011 financial figures in this report have been adjusted according to IFRS. Figures are stated in nominal Mexican pesos ($) and in current U.S. Dollars (U.S. $), as indicated. Where applicable, peso amounts were translated into U.S. Dollars using the average exchange rate of the months during which operations were recorded. Financial ratios are calculated in U.S. Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.
CONSOLIDATED SECTION Operations Comments on the performance of each one of ALFA s companies during 2Q12: Alpek reported revenues of U.S $1,913 million and EBITDA of U.S. $201 million in 2Q12, representing a 1% gain but a 3% reduction vis à vis 2Q11, respectively. Demand in North America remained strong, which allowed Alpek to sell 5% more products year on year. In other regions, particularly in Europe and Asia, however, lower growth expectations combined with a reduction in oil prices triggered a destocking decision in the industry, as customers chose to reduce purchases in anticipation of a potential decline in feedstock prices. As oil prices seem to have stabilized at present, industry experts expect demand and inventory build up will come back. The year on year EBITDA comparison was more difficult as Alpek s 2Q11 revenues benefitted from force majeure problems at a competitor s facility. On a cumulative basis, revenues grew 7% and EBITDA 3%, reflecting the strength of its polyester operations. During 2Q12, Alpek became a public company. Proceeds from the IPO will be used to finance significant investment projects and reduce debt. Accordingly, during 2Q12, progress was made in debottlenecking some plants and in building the first of three cogeneration projects Alpek intends to have close to its petrochemical facilities in Mexico to substantially reduce energy costs. Alpek s net debt decreased by U.S. $417 million when compared to 2Q11. Financial ratios at the close of the quarter were: Net Debt to LTM EBITDA of 0.8 times, and Interest Coverage of 7.8 times, which compare to the 1.3 times and 9.7 times reported as of the end of 2Q11. (See Appendix C for a full discussion of Alpek s 2Q12 financial results) The North American auto industry continued to perform well during 2Q12, recovering ground lost with the 2009 crisis. Production of cars and light vehicles by Nemak s North American customers, a metric more relevant to Nemak than vehicle sales, was 2.7 million units during 2Q12, up 9% from 2Q11. Nemak benefitted from this recovery and, during 2Q12, sold 10.1 million equivalent heads, 7% more than in 2Q11. Quarterly revenues of U.S. $928 million were down 2% from 2Q11, mainly as a result of lower aluminum prices and unfavorable exchange rates. However, 2Q12 EBITDA was U.S. $130 million, up 35% year on year, reflecting higher sales volumes, lower costs and expenses, and efficiencies at plant level. Year to date, Nemak reported revenues and EBITDA of U.S. $1,848 million and U.S. $250 million, up 1% and 26% from 1H11, respectively. Capital expenditures in 2Q12 were U.S. $68 million. Also, during the quarter, Nemak acquired J.L. French, a U.S. company specializing in High Pressure Die Casting for the production of aluminum transmission parts, for a net amount of U.S. $215 million. As a result of this transaction, Nemak s net debt at the end of the quarter increased to U.S. $1,325 million. Financial ratios were the following: Net Debt to Proforma LTM EBITDA, which includes J.L. French s LTM EBITDA, of 2.8 times and Interest Coverage of 3.9 times. These ratios compare to 3.1 and 4.1 times, respectively, in 2Q11. Sigma s 2Q12 revenues were U.S. $857 million, down 1% year on year. The reduction was principally the result of presenting in dollar terms revenues that were generated in pesos during a period of high peso depreciation. Sales volume grew 4% year on year, driven mostly by sales in the Mexican market. Year to date, Sigma reported revenues of U.S. $1,698 million, up 3% from the same period last year. This was the result of both volume gains and price increases implemented in response to both higher raw material costs and a higher exchange rate between the Mexican peso and the U.S. dollar. 2
2Q12 EBITDA was U.S. $120 million, up 13% from 2Q11, reflecting the volume gains plus efficiency improvements and savings in costs and expenses. On a cumulative basis, Sigma reported 1H12 EBITDA of U.S. $227 million, up 12% from 1H11. During 2Q12, Sigma s capital expenditures were U.S. $34 million mainly for fixed asset replacement and to expand its distribution fleet, which now reaches an additional 25,000 points of sale when compared to 2Q11. At the end of the quarter, net debt was U.S. $974 million, a decrease of U.S. $96 million from 2Q11. Net Debt to LTM EBITDA was 2.3 times, while Interest Coverage was 5.5 times. These ratios compare to 2.5 times and 5.7 times, respectively, as reported in 2Q11. Alestra continued to report favorable results due to its focus on offering services which combine IT with telecommunications. The company reported revenues of U.S. $86 million for the quarter, down 12% year on year. The decline was mainly due to the depreciation of the peso against the U.S. dollar, which affected peso based companies such as Alestra, as it reduced the value in U.S. dollars of revenues generated in Mexican pesos. In peso terms, 2Q12 revenues were in line with 2Q11. On a cumulative basis, revenues for the year were U.S. $176 million, a 9% decrease vis a vis the previous year, for the same reasons. Alestra s 2Q12 EBITDA totaled U.S. $31 million, down 7% year on year in dollars, but up 7% in peso terms. On a cumulative basis, EBITDA amounted to U.S. $72 million, an 11% increase over the first half of 2011. Alestra is focused on improving efficiency and reducing costs. Actions taken with this objective include expanding its own fiber optics network to reduce leasing costs, and lowering the payment of interconnection rates. As a result, Alestra s EBITDA margin increased to 36% in 2Q12, from 34% in 2Q11. Capital expenditures of U.S. $11 million were made during the quarter to increase customer access to Alestra s network. At quarter end, net debt amounted to U.S. $138 million, a U.S. $20 million reduction from 2Q11. Financial ratios improved: Net Debt to LTM EBITDA was 1.0 times, while Interest Coverage was 5.1 times. These figures compare to 1.2 times and 4.7 times, respectively, in 2Q11. Newpek, the hydrocarbons venture, continued to drill and connect more wells to production during 2Q12. At the end of the quarter, 214 wells were producing, compared to 82 in 2Q11. Revenues for the quarter reached U.S. $20 million and EBITDA was U.S. $16 million. This represented year on year increases of 132% and 170%, respectively. Year todate, revenues and EBITDA amounted to U.S. $41 million and U.S. $30 million, up 181% and 209% from the same period a year ago, respectively. Towards the end of 2Q12, ALFA announced that a consortium formed between one of its subsidiaries, called Alfasid, and Monclova Pirineos Gas, S.A. de C.V. (MPG), a Mexican oil exploration and production company, had won a tender auction made by Petróleos Mexicanos, S.A. (PEMEX) for the exploration and production of hydrocarbons in the "San Andrés" and "Tierra Blanca" blocks, two mature oil fields in Veracruz, Mexico. The business plan calls for the initial investment by Alfasid of approximately U.S. $25 million in the first two years of operation of the venture. Further investments are possible contingent upon the value of the undeveloped reserves in these fields. The contract with PEMEX has a maximum term of 35 years. Consolidated Financial Results 2Q12 consolidated revenues totaled U.S. $3,832 million, slightly above the U.S. $3,824 million reported in 2Q11. This performance was the result of a 5% growth in sales volumes, price increases at Sigma to recover margins lost to higher raw materials costs and the effect of the peso depreciation, as well as lower petrochemicals and aluminum prices. Revenues grew organically and from the contribution of the acquisitions in the petrochemical sector. On a 3
cumulative basis, revenues amounted to U.S. $7,624 million, up 4% from the same year ago period. The increase in revenues was the result of higher sales volumes in the polyester chain business, as well as increased sales of hightech auto components and food products. While the impact is lower on a consolidated basis, the progress made by the hydrocarbons business also contributed to the increase in revenues. Foreign sales represented 62% of the total during 2Q12, up from 60% in 2Q11. This is mainly the result of Alpek s acquisition of petrochemical plants in the U.S. during 2011, together with higher foreign sales at Nemak. Operating income increased 11% year on year to U.S. $339 million. Significant profitability improvements at Nemak and Sigma, and the substantial progress made at the hydrocarbons business mainly drove this increase. Additionally, the PET plant at Pearl River, which was acquired last September was not consolidated in 2Q11. Year to date, operating income reached U.S. $659 million, up 16% from the same period last year, basically for the same reasons. Reflecting the increase in operating income, EBITDA reached U.S. $483 million, representing a 10% year on year increase. On a cumulative basis, 1H12 EBITDA was U.S. $945 million, up 12% from 1H11. The single most important factor impacting ALFA s 2Q12 comprehensive financing expense (CFE) was an exchange loss driven by the 15% depreciation of the peso between 2Q11 and 2Q12. As a result, CFE amounted to U.S. $139 million, up from U.S. $36 million in 2Q11, when the peso appreciated and exchange gains were reported. Year todate, ALFA reported CFE in the amount of U.S. $86 million, which compares to CFE of U.S. $20 million in the first half of 2011. The increase in CFE was also the result of the peso depreciation already mentioned. ALFA reported a Majority Net Income of U.S. $112 million during 2Q12, compared to U.S. $166 million in 2Q11. The foreign exchange loss which impacted CFE more than offset the improvement in operating results. On a cumulative basis, ALFA posted a 1H12 Majority Net Income of U.S. $355 million, relatively unchanged from the U.S. $360 million reported in 1H11. Capital Expenditures and Net Debt Consolidated capital expenditures and acquisitions totaled U.S. $373 million in 2Q12. Funds were mainly used to acquire J.L. French, debottleneck some production facilities, modernize and expand production capacity at Nemak, upgrade and expand Sigma s distribution network and to increase direct customer access at Alestra. Despite the expenditures made during the quarter, consolidated net debt declined to U.S. $3,109 million, a U.S. $435 million reduction from a year ago levels, reflecting the proceeds from Alpek s IPO. ALFA s financial condition improved: Net Debt to LTM EBITDA was 1.8 times, while Interest Coverage was 5.6 times. These ratios compare to 2.0 times and 6.2 times respectively, at the end of 2Q11. (See Tables 1 to 7 for more detailed information on ALFA s consolidated results) 4
NEMAK HIGH TECH ALUMINUM AUTO PARTS (24% and 27% of ALFA s Revenues and EBITDA in 2Q12) Industry Comments During 2Q12, the North American auto industry continued to recover. The 2Q12 SAAR was 14.1 million units, 16.5% higher than the 12.1 million reported in 2Q11. Nemak s U.S. customers continued to post a solid performance, producing 2.7 million vehicles in 2Q12, up 9% year on year. In Europe, the economic situation continued to negatively affect demand in most countries, particularly those in the South of the continent. The 2Q12 SAAR was 13.3 million units, 3.5% lower than in 2Q11. Auto production by Nemak s customers was down 8.2% year on year. However, Nemak s 2Q12 European sales grew 4% in the same period. This achievement is explained by the launching of new programs with higher performance, and by the company s greater exposure to German OEMs, which have leveraged their premium brands to find export opportunities in North America and Asia. Operations Nemak sold 10.1 million equivalent heads in 2Q12, up 7% year on year. By region, North American sales represented 60% of the quarter s total, while Europe represented 31%. Latin America and Asia comprised the remainder. Year todate, Nemak sold 20.3 million equivalent heads, up 8% from the 18.7 million sold in 1H11. Financial Results 2Q12 revenues totaled U.S. $928 million, down 2% year on year. The decrease in revenues reflected lower aluminum prices and unfavorable exchange rates, which more than offset the favorable impact of higher sales volumes. Year todate, Nemak reported revenues of U.S. $1,848 million, slightly above the U.S. $1,835 million of 1H11. 2Q12 operating income reached U.S. $77 million, up 63% year on year. The main factors behind this achievement include: higher sales volumes, lower launching costs, efficiency gains at plant level, and lower operating expenses overall. Nemak s 1H12 operating income was U.S. $144 million, up 48% from 1H11. In line with operating income, 2Q12 EBITDA rose to U.S. $130 million, a 35% year on year increase. Per unit EBITDA amounted to U.S. $12.90 in 2Q12, up from U.S. $10.30 in 2Q11. On a cumulative basis, Nemak s 1H12 EBITDA was U.S. $250 million, a 26% increase over 1H11. Capital Expenditures and Net Debt During 2Q12, Nemak s capital expenditures were U.S. $68 million. Expenditures were split evenly between North American and European plants, with a small proportion invested in Asia. The company has continued to upgrade existing facilities and expand capacity. Additionally, the new, small plant in India commenced operations in June, and the foundations were laid for the new plant in China, with first phase expected to be ready by the end of 2013. 5
On June 28, 2012, Nemak announced the successful acquisition of J.L. French, a manufacturer of High Pressure Die Casting aluminum transmission components and other products, with plants in the U.S., Spain and China. With this acquisition, Nemak seeks to capture attractive growth opportunities in aluminum transmission components and facilitate its entrance into other high value added products. J.L. French reported sales of U.S. $500 million and EBITDA of U.S. $52 million in 2011. The net investment was U.S. $215 million. This figure is already reflected in Nemak s net debt as of June 30, 2012, while results contributed by J.L. French will show up beginning 3Q12. As a result of these investments, Nemak s net debt increased by U.S. $119 million during 2Q12 vs 2Q11, reaching U.S. $1,325 million. Financial ratios were the following: Net Debt to Proforma LTM EBITDA, which includes J.L. French s LTM EBITDA, of 2.8 times; and Interest Coverage of 3.9 times. These ratios compare to 3.1 and 4.1 in 2Q11, respectively. (See Tables 8 to 10 for more detailed information on Nemak) 6
SIGMA REFRIGERATED FOOD PRODUCTS (22% and 25% of ALFA s Revenues and EBITDA in 2Q12) Industry Comments During 2Q12, the Mexican food industry continued to improve. According to the National Association of Supermarkets and Department Stores in Mexico (ANTAD), supermarket sales data, a proxy for food consumption, grew 4% year on year, maintaining the healthy trends shown since late 2011. Raw material prices have shown mixed trends so far in 2012. While chicken paste prices have increased nearly 50%, the price of other raw materials, such as pork and turkey thigh, has decreased. In addition, the peso depreciated 3% during 2Q12, adding pressure on margins for companies importing raw materials. Food companies have had to adapt to this volatile environment by carefully managing pricing policies to maintain profitability. Operations Sigma s sales volume reached 293,231 tons in 2Q12, a 4% year on year increase and up almost 5% on a cumulative basis. This increase was driven by higher sales in Mexico, where volume grew 5% due to strong demand in all product lines, as well as by the recent expansion of the distribution fleet, which has allowed Sigma to reach approximately 25,000 additional points of sale. In the U.S., Central America, the Dominican Republic and Peru, sales volumes remained stable. Segmenting by product line, during 2Q12 processed meats grew 3% year on year, while dairy products increased 7%, driven in part by new product launches. Sigma s 2Q12 sales prices in pesos rose 9.5% year on year. For the first six months of the year, prices were 9.4% higher when compared to the same year ago period. In both periods the price increases were in response to higher raw material costs and a higher exchange rate between the Mexican peso and the U.S. Dollar. As previously disclosed, Sigma has been adjusting prices for its various product lines to maintain profitability, more so in 4Q11. However, during 2Q12, lower prices for certain raw materials offset the adverse effect of a higher exchange rate, allowing Sigma to maintain prices flat when compared to 1Q12. Financial Results 2Q12 revenues were U.S. $857 million, 1% lower than 2Q11. This decrease was the result of the 15% peso depreciation between 2Q11 and 2Q12. When presented in pesos, however, 2Q12 sales rose 15% over the same quarter last year, reflecting both higher sales prices in local currency and volumes. Foreign sales represented 35% of total sales in 2Q12, compared to 34% in 2Q11. For the first half of the year, revenues reached U.S $1,698 million, up 3% versus the comparable period last year (15% higher when measured in pesos). Operating income for the quarter reached U.S. $93 million and U.S. $173 million for the first six months of 2012. These figures represented gains of 21% and 20%, respectively, when compared to 2Q11 and on a cumulative basis, respectively, despite the peso depreciation. About one half of the year on year increase was due to higher operating income in the U.S. operations due to synergies and efficiencies. The remaining was the result of the domestic increase in sales volume. 7
Sigma s 2Q12 EBITDA was U.S. $120 million, up 13% year on year. For the first semester of 2012, EBITDA reached U.S. $227 million, 12% above the same period of 2011. EBITDA margin for the quarter was 14.0%, higher than the 12.3% achieved in 2Q11. Capital Expenditures and Net Debt During 2Q12, Sigma s capital expenditures were U.S. $34 million. Funds were invested in the expansion of the distribution fleet, plant maintenance, and other minor projects. At quarter end, net debt was U.S. $974 million, a decrease of U.S. $96 million over 2Q11. Net Debt to LTM EBITDA was 2.3 times, and Interest Coverage was 5.5 times. These figures compare to 2.5 times and 5.7 times, respectively, reported in 2Q11. (See Tables 11 to 14 for more detailed information on Sigma) 8
ALESTRA TELECOMMUNICATIONS (2 % and 6% of ALFA s Revenues and EBITDA in 2Q12) Operations During 2Q12, Alestra continued to increase its IT services offering. For example, the company enhanced its health vertical solution with Smart HITS (Hospital Information Technology System). This software is powered by ecaresoft through Cloud Computing in Software as a Service. It offers the best clinical applications available for Hospital Management and Electronic Clinic File. Value Added Services (VAS) volume totaled 968,000 E0s (equivalent of customer access circuits providing services), a 19% year on year increase. Legacy long distance services represented 18% of the total revenues for the quarter. Financial Results Similar to other peso based companies in Mexico, Alestra s financial results presented in dollars were negatively impacted by the 15% peso depreciation that took place between the periods under comparison. As a result, 2Q12 revenues amounted to U.S. $ 86 million, a 12% decrease year on year, offsetting a strong 19% year on year volume increase. In pesos, however, revenues increased 2% year on year. Alestra has been successful in developing revenue alternatives to offset the impact of AGN services it no longer provides and which represented 20% of total revenues at one point. During 2Q12, value added services represented 82% of total revenues. On a cumulative basis, revenues for the year amounted to U.S. $176 million, a 9% decrease vis a vis the previous year, for the same reasons. Alestra remains focused on increasing efficiency and reducing costs. Among other actions, the company is expanding its fiber optics network to reduce leasing costs. These initiatives, along with lower interconnection rates and long distance traffic, resulted in a 15% year on year cost reduction. Likewise, operating expenses decreased 12% when compared to 2Q11. Operating income for the quarter amounted to U.S. $15 million, a 2% year on year decrease which is explained by the negative impact of the peso depreciation. In pesos, operating income showed a 12% year on year increase. Year todate, however, operating income amounted to U.S. $40 million, 37% above the same year ago period. 2Q12 EBITDA totaled U.S. $31 million, down 7% year on year in dollars but up 7% in peso terms. EBITDA margin was 36% during 2Q12, higher than the 34% reported in 2Q11. On a cumulative basis, EBITDA amounted to U.S. $72 million, an 11% year to date increase. Capital Expenditures and Net Debt Capital expenditures for the quarter totaled U.S. $11 million. Funds were mainly used to increase last mile customer access. Alestra expects higher capital expenditures in the following quarters, as it continues to expand its network as planned, and a new data center is built in the state of Queretaro. As of the end of the quarter, Alestra s Net Debt was U.S. $138 million. Financial ratios improved: Net Debt to LTM EBITDA was 1.0 times; Interest Coverage was 5.1 times. These figures compare to 1.2 times and 4.7 times, respectively, in 2Q11. (See Tables 15 to 17 for more detailed information on Alestra) 9
NEWPEK NATURAL GAS AND HYDROCARBONS (1% and 3% of ALFA s Revenues and EBITDA in 2Q12) During 2Q12, Newpek connected to sales 37 new liquids rich wells from the Eagle Ford Shale play (EFS), bringing wells in production at the end of the quarter to 174 at EFS, and 40 at the Edwards trend. This represents a significant increase over the 42 wells in production at the end of 2Q11 at the EFS. Newpek continued to accelerate the development of new wells to take advantage of a liquids rich natural gas area in Southern Texas. Development of ground infrastructure to connect wells to gathering facilities has been a key element in the success of the company. At present, there are 12 rigs and 3 dedicated fracking fleets in operation at the EFS. Newpek s sales volumes rose to an average of 4.5 thousand barrels of oil equivalent per day (MBOEPD) during 2Q12, up 124% from 2Q11. Of the total sales volume, 48% were liquids (ethane, propane, butane) and oil, which have a considerable higher value than dry gas. This percentage compares with 34% in 2Q11, and is in line with the company s drilling plan to increase exposure to liquids. Newpek s 2Q12 revenues totaled U.S. $20 million and EBITDA was U.S. $16 million. This represented year on year increases of 132% and 170%, respectively. On a cumulative basis, revenues increased 181% and EBITDA 209% to U.S. $41 million and U.S. $30 million, respectively. (See Tables 18 to 20 for more detailed information on Newpek) 10
FINANCIAL INFORMATION CONSOLIDATED AND GROUP TABLES CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF INCOME FOR MORE INFORMATION AND THE SPANISH VERSION OF THIS REPORT, VISIT ALFA s WEBPAGE AT WWW.ALFA.COM.MX ENRIQUE FLORES +52 (81) 8748.1207 eflores@alfa.com.mx LUIS OCHOA +52 (81) 8748.2521 lochoa@alfa.com.mx RAÚL GONZÁLEZ +52 (81) 8748.1177 rgonzale@alfa.com.mx JUAN ANDRÉS MARTÍN +52 (81) 8748.1676 jamartin@alfa.com.mx BREAKSTONE GROUP Susan Borinelli +1 (646) 330.5907 sborinelli@breakstonegroup.com 11
ALFA TABLE 1 VOLUME AND PRICE CHANGES (%) 2Q12 vs. YTD'12 vs. 1Q12 2Q11 YTD'11 Total Volume 3 5 7 Domestic Volume 0 2 3 Foreign Volume 4 7 9 Avg. Ps. Prices 1 11 10 Avg. U.S. $ Prices (1) (4) (2) TABLE 2 REVENUES Total Revenues Ps. Millions 51,568 49,612 44,260 4 14 101,180 86,493 15 U.S. $ Millions 3,832 3,792 3,824 1 0 7,624 7,307 4 Domestic Revenues Ps. Millions 19,670 18,976 17,540 4 11 38,646 34,756 10 U.S. $ Millions 1,462 1,452 1,538 1 (5) 2,914 2,956 (1) Foreign Revenues Ps. Millions 31,898 30,636 26,720 4 19 62,533 51,737 21 U.S. $ Millions 2,370 2,341 2,286 1 4 4,710 4,351 8 Foreign / Total (%) 62 62 60 62 60 TABLE 3 OPERATING INCOME AND EBITDA Operating Income Ps. Millions 4,562 4,174 3,535 9 23 8,736 6,777 22 U.S. $ Millions 339 320 302 6 11 659 570 16 EBITDA Ps. Millions 6,501 6,030 5,118 8 27 12,531 10,005 25 U.S. $ Millions 483 462 438 5 10 945 841 12 12
ALFA TABLE 4 COMPREHENSIVE FINANCING (EXPENSE) / INCOME (CFI) (U.S. $ MILLIONS) Financial Expenses (82) (73) (79) 7 (12) (155) (147) (5) Financial Income 15 8 8 67 400 23 15 53 Net Financial Expenses (67) (65) (71) 15 4 (132) (132) 0 Fx Gains (Losses) (52) 100 16 (225) (471) 48 40 20 Equity Swaps 0 0 27 (100) (100) 0 65 (100) Interest Rate Swaps 0 (1) (2) 100 (1) (3) 67 Gas & Comm. Hedges (20) 19 (6) (322) (233) (1) 10 (110) Capitalized CFE 0 0 0 0 0 0 CFE (139) 53 (36) (88) (276) (86) (20) (330) Avg. Cost of Borrowed Funds (%) 5.5 4.8 5.5 5.1 5.5 TABLE 5 MAJORITY NET INCOME (U.S. $ MILLIONS) Consolidated Net Income (Loss) 134 252 182 (47) (26) 386 395 (2) Minority Interest 22 9 16 144 38 31 35 (11) Majority Net Income (Loss) 112 243 166 (54) (33) 355 360 (2) Per Share (U.S. Dollars) 0.22 0.47 0.31 (53) (29) 0.68 0.67 1 Avg. Outstanding Shares (Millions) 518 519 534 519 534 TABLE 6 CASH FLOW (U.S. $ MILLIONS) (%) 1Q12 vs. EBITDA 483 462 438 5 10 945 841 12 Net Working Capital & Others (25) (150) (19) 83 (32) (175) (114) (54) Capital Expenditures & Acq. (373) (132) (100) (183) (273) (505) (817) 38 Net Financial Expenses (72) (62) (74) (16) 3 (134) (144) 7 Taxes, Profit Sharing (83) 48 (206) (273) 60 (35) (264) 87 Dividends 0 (125) (118) 100 100 (125) (123) (2) Other Sources / Uses 609 (48) (27) 1,369 2,356 561 (55) 1,120 Decrease (Increase) in Net Debt 539 (7) (106) 7,800 608 532 (676) 179 13
ALFA TABLE 7 SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS) 2Q12 1Q12 2Q11 YTD'12 YTD'11 Assets 11,837 11,301 11,515 11,837 11,515 Liabilities 7,390 7,622 7,500 7,390 7,500 Stockholders Equity 4,448 3,680 4,015 4,448 4,015 Majority Equity 3,500 3,328 3,535 3,500 3,535 Net Debt 3,109 3,648 3,544 3,109 3,544 Net Debt/LTM EBITDA* 1.8 2.1 2.0 1.8 2.1 Interest Coverage* 5.6 5.4 6.2 5.6 6.4 * LTM: last 12 months for 2Q12 & 1Q12. Annualized basis for 2Q11. 14
NEMAK TABLE 8 REVENUES Total Revenues Ps. Millions 12,493 12,016 11,025 4 13 24,509 21,832 12 U.S. $ Millions 928 920 943 1 (2) 1,848 1,835 1 Domestic Revenues Ps. Millions 1,539 1,442 1,142 7 35 2,981 2,273 31 U.S. $ Millions 114 110 98 4 17 225 191 17 Foreign Revenues Ps. Millions 10,954 10,574 9,883 4 11 21,528 19,558 10 U.S. $ Millions 814 809 845 1 (4) 1,623 1,644 (1) Foreign / Total (%) 88 88 90 88 90 Total Volume (Million Eq. Heads) 10.1 10.2 9.4 (1) 7 20.3 18.7 8 TABLE 9 OPERATING INCOME AND EBITDA Operating Income Ps. Millions 1,032 877 551 18 87 1,909 1,154 65 U.S. $ Millions 77 67 47 14 63 144 97 48 EBITDA Ps. Millions 1,750 1,571 1,129 11 55 3,321 2,364 40 U.S. $ Millions 130 120 97 8 35 250 199 26 TABLE 10 SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS) 2Q12 1Q12 2Q11 YTD'12 YTD'11 Assets 3,751 3,744 3,797 3,751 3,797 Liabilities 2,654 2,638 2,594 2,654 2,594 Stockholders Equity 1,097 1,106 1,203 1,097 1,203 Net Debt 1,325 1,197 1,206 1,325 1,206 Net Debt/LTM EBITDA* 2.8 3.1 3.1 3.1 3.0 Interest Coverage* 3.9 3.3 4.1 3.9 4.4 * LTM: last 12 months for 2Q12 & 1Q12. Annualized basis for 2Q11. 15
SIGMA TABLE 11 VOLUME AND PRICE CHANGES (%) 2Q12 vs. YTD'12 vs. 1Q12 2Q11 YTD'11 Total Volume 7.0 4.3 4.5 Avg. Ps. Prices (1.7) 9.5 9.4 Avg. U.S. $ Prices (4.6) (4.9) (1.9) TABLE 12 REVENUES Total Revenues Ps. Millions 11,546 10,987 10,074 5 15 22,533 19,633 15 U.S. $ Millions 857 840 862 2 (1) 1,698 1,650 3 Domestic Revenues Ps. Millions 7,483 7,297 6,669 3 12 14,780 13,069 13 U.S. $ Millions 556 558 570 0 (3) 1,114 1,099 1 Foreign Revenues Ps. Millions 4,063 3,690 3,405 10 19 7,753 6,564 18 U.S. $ Millions 301 282 291 7 3 583 552 6 Foreign / Total (%) 35 34 34 34 33 TABLE 13 OPERATING INCOME AND EBITDA Operating Income Ps. Millions 1,259 1,037 900 21 40 2,296 1,715 34 US$ Millions 93 79 77 18 21 173 144 20 EBITDA Ps. Millions 1,617 1,393 1,240 16 30 3,010 2,403 25 U.S.$ Millions 120 107 106 13 13 227 202 12 16
SIGMA TABLE 14 SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS) 2Q12 1Q12 2Q11 YTD'12 YTD'11 Assets 2,131 2,150 2,293 2,131 2,293 Liabilities 1,503 1,519 1,587 1,503 1,587 Stockholders Equity 628 631 705 628 705 Net Debt 974 1,023 1,070 974 1,070 Net Debt/LTM EBITDA* 2.3 2.5 2.5 2.3 2.7 Interest Coverage* 5.5 5.3 5.7 5.5 6.0 * LTM: last 12 months for 2Q12 & 1Q12. Annualized basis for 2Q11. 17
ALESTRA TABLE 15 REVENUES Total Revenues Ps. Millions 1,160 1,169 1,142 (1) 2 2,328 2,303 1 U.S. $ Millions 86 89 98 (4) (12) 176 193 (9) Data, Internet and Local Services (VAS) Ps. Millions 945 937 904 1 5 1,882 1,818 4 U.S. $ Millions 70 72 77 (4) (11) 142 153 (8) Long Distance Services Ps. Millions 214 232 238 (8) (10) 446 484 (8) U.S. $ Millions 16 18 20 (9) (20) 34 41 (17) Data, Internet and Local Services / Total (%) 82 80 79 81 79 TABLE 16 OPERATING INCOME AND EBITDA Operating Income Ps. Millions 199 329 177 (40) 12 528 347 52 U.S. $ Millions 15 25 15 (42) (2) 40 29 37 EBITDA Ps. Millions 417 539 389 (23) 7 956 777 23 U.S. $ Millions 31 41 33 (25) (7) 72 65 11 TABLE 17 SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS) 2Q12 1Q12 2Q11 YTD'12 YTD'11 Assets 547 568 600 547 600 Liabilities 333 338 345 333 345 Stockholders Equity 214 231 255 214 255 Net Debt 138 147 158 138 158 Net Debt/LTM EBITDA* 1.0 1.1 1.2 1.0 1.2 Interest Coverage* 5.1 5.1 4.7 5.1 4.8 * LTM: last 12 months for 2Q12 & 1Q12. Annualized basis for 2Q11. 18
NEWPEK TABLE 18 REVENUES AND EBITDA Total Revenues 2Q12 1Q12 2Q11 1Q12 2Q11 YTD'12 YTD'11 1Q12 Ps. Millions 276 265 103 4 167 541 172 214 U.S. $ Millions 20 20 9 1 132 41 15 181 Foreign Revenues Ps. Millions 276 265 103 4 167 541 172 214 U.S. $ Millions 20 20 9 1 132 41 15 181 Foreign / Total (%) 100 100 100 100 100 100 EBITDA U.S. $ Millions 16 14 6 8 170 30 10 209 Volume Thousand Barrels of Oil Equivalent Per Day (MBOEPD) 4.45 4.28 1.99 4 124 4.36 1.77 146 TABLE 19 SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS) 2Q12 1Q12 2Q11 YTD'12 YTD'11 Assets 101 99 74 101 74 Liabilities 26 26 13 26 13 Stockholders Equity 75 72 61 75 61 Net Debt 8 10 3 8 3 Net Debt/LTM EBITDA* 0.2 0.2 0.1 0.2 0.1 Interest Coverage* 66.1 55.7 54.0 66.1 83.7 * LTM: last 12 months for 2Q12 & 1Q12. Annualized basis for 2Q11. TABLE 20 WELLS 2Q12 1Q12 2Q11 YTD'12 YTD'11 Producing Wells Edwards 40 40 40 40 40 Eagle Ford Shale 174 137 42 174 42 19
Appendix A ALFA, S.A.B. de C.V. and Subsidiaries BALANCE SHEET Information in millions of Nominal Mexican Pesos (%) Jun 12 vs. jun 12 mar 12 jun 11 Mar 12 Jun 11 ASSETS CURRENT ASSETS: Cash and cash equivalents 15,178 8,939 6,652 70 128 Trade accounts receivable 20,143 20,573 19,765 (2) 2 Other accounts and notes receivable 5,875 3,337 4,040 76 45 Inventories 21,931 20,335 18,285 8 20 Other assets 799 827 1,794 (3) (55) Total current assets 63,926 54,011 50,536 18 26 INVESTMENT IN SHARES IN ASSOCIATES 3,023 327 313 824 866 PROPERTY, PLANT AND EQUIPMENT 74,474 71,819 68,061 4 9 DEFERRED CHARGES & OTHER INTANGIBLE ASSETS 18,528 18,029 16,796 3 10 OTHER ASSET 1,663 1,023 619 63 169 Total assets 161,614 145,209 136,325 11 19 LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Current portion of long term debt 3,584 3,161 3,320 13 8 Bank loans and notes payable 1,163 3,234 985 (64) 18 Suppliers 20,955 20,505 20,772 2 1 Other accounts payable and accrued expenses 10,123 9,955 9,257 2 9 Total current liabilities 35,189 36,855 34,334 (5) 2 LONG TERM LIABILITIES: Long term debt 53,025 48,976 43,508 8 22 Deferred income taxes 8,625 8,724 7,997 (1) 8 Other liabilities 1,958 1,401 1,589 40 23 Estimated liabilities for seniority premiums and pension plans 2,094 1,974 1,364 6 54 Total liabilities 100,891 97,930 88,792 3 14 STOCKHOLDERS' EQUITY: Majority interest: Nominal capital stock 216 216 222 (3) Restatement of capital stock Contributed capital 216 216 222 (3) Earned surplus 47,571 42,549 41,625 12 14 Total majority interest 47,787 42,765 41,847 12 14 Minority interest 12,936 4,514 5,686 187 93 Total stockholders' equity 60,723 47,279 47,533 28 24 Total liabilities and stockholders' equity 161,614 145,209 136,325 11 17 Current ratio 1.78 1.47 1.47 Debt to equity 1.66 2.07 1.87
Appendix B ALFA, S.A.B. DE C.V. and Subsidiaries STATEMENT OF INCOME Information in millions of Nominal Mexican Pesos 2Q12 vs. (%) 2Q12 1Q12 2Q11 YTD '12 YTD '11 1Q12 2Q11 Net sales 51,568 49,612 44,260 101,180 86,493 4 17 Domestic 19,671 18,976 17,540 38,647 34,756 4 12 Export 31,897 30,636 26,720 62,533 51,737 4 19 Cost of sales (42,260) (40,672) (36,342) (82,932) (71,169) (4) (16) Gross profit 9,308 8,940 7,918 18,248 15,324 4 18 Operating expenses and others (4,746) (4,766) (4,383) (9,512) (8,547) 0 (8) Operating income 4,562 4,174 3,535 8,736 6,777 9 29 Comprehensive financing expense, net (1,860) 730 (439) (1,130) (200) (355) (324) Equity in income (loss) of associates (7) (8) (11) (15) (15) 13 (57) Income before the following provision 2,695 4,896 3,085 7,591 6,562 (45) (14) Provisions for: Income tax (880) (1,585) (971) (2,465) (1,845) 44 (10) Consolidated net income 1,815 3,311 2,114 5,126 4,717 (45) (16) Income (loss) corresponding to minority interest 303 122 166 425 429 148 45 Net income (loss) corresponding to majority interest 1,512 3,189 1,948 4,701 4,288 (53) (29) EBITDA 6,501 6,031 5,118 12,532 10,005 8 27 Interest coverage* 5.6 5.4 6.2 5.6 6.4 * LTM for 1Q12 & 4Q11. For 1Q11 on annualized basis.
APPENDIX C Alpek s 2Q12 Report 22
2Q12 ALPEK, S.A.B. DE C.V. Alpek reports another solid quarter - 2Q12 Revenues of U.S. $1,913 million and EBITDA of U.S. $201 million Monterrey, N.L., México. July 16, 2012.-ALPEK, S.A.B. de C.V. (Alpek), the leading Mexican petrochemical company, announced today unaudited results for the second quarter of 2012 (2Q12). Revenues amounted to U.S. $1,913 million, up 1% year-on-year. EBITDA reached $201 million in line with company guidance. On a cumulative basis, Revenues grew 7% and EBITDA 3%. 2Q12 Majority Net Income was U.S. $82 million, which compares to U.S. $95 million during 2Q11, mainly as a result of higher Comprehensive Financial Expense (CFE). This is the first time we report quarterly results since our company became public, said José de Jesús Valdez, Alpek s CEO. The confidence our investors deposited in us motivates us to work hard to meet their expectations. Thus, during 2Q12 we were able to report a solid performance, resulting from a 5% increase in sales volume vis-à-vis 2Q11. Our polyester business remained strong due to its ties to the food and beverage industries in North America. The plastics and chemicals segment reported good results, with the exception of Caprolactam which depends more on exports to Asia, he added. The proceeds Alpek received from the IPO will be used to finance our growth in the near future and repay some outstanding debts. For instance, we have already started to debottleneck the Columbia and Pearl River plants with marginal investments. Likewise, we have begun the construction of the first of three cogeneration plants we will build in Mexico, which will allow us to achieve important savings in energy costs, Mr. Valdez concluded. The IPO strengthen Alpek s financial condition. Accordingly, Net Debt decreased by U.S. $564 million during 2Q12, for a balance of U.S. $645 million. Financial ratios also improved: Net Debt to LTM EBITDA was 0.8 times, while Interest Coverage was 7.8 times. Selected Financial Information (U.S. $ Millions) Total Volume (k tons) 1,041 1,021 994 2 5 2,062 1,924 7 Consolidated Revenues 1,913 1,896 1,887 1 1 3,809 3,560 7 Polyester and polyester products 1,496 1,496 1,423 (0) 5 2,991 2,705 11 Plastics and chemicals 417 400 464 4 (10) 817 855 (4) Consolidated EBITDA 201 195 208 3 (3) 396 386 3 Polyester and polyester products 144 139 146 4 (1) 283 275 3 Plastics and chemicals 57 56 61 2 (6) 114 111 3 CONTENTS Industry Comments. 2 Operations. 2 Financial Results 3 Capital Expenditures & Net Debt. 5 Tables and Financial Statements 6 Majority Net Income 82 78 95 5 (14) 160 199 (20) Capex and Acquisitions 27 12-2 129 (1,879) 39 619 (94) Net Debt 645 1,209 1,062 (47) (39) 645 1,062 (39) Net Debt/LTM EBITDA* 0.82 1.54 1.26 0.82 1.36 Interest Coverage* 7.8 8.1 9.7 7.8 9.7 * LTM: last 12 months for 2Q12 and 1Q12. Annualized basis for 2Q11. This release contains forward looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information based on International Financial Reporting Standards (IFRS) in effect in Mexico beginning January 2012. The data for 2Q11 are combined numbers. For comparison purposes, 2011 financial figures in this report have been adjusted according to IFRS. Figures are stated in nominal Mexican pesos ($) and in current U.S. Dollars (U.S. $), as indicated. Where applicable, peso amounts were translated into U.S. Dollars using the average exchange rate of the months during which operations were recorded. Financial ratios are calculated in U.S. Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.
Industry comments During 2Q12, reduced oil prices triggered a decline in prices of petrochemical products. As a result, in some cases demand was temporarily affected, as customers reduced inventories in anticipation of lower prices. Oil prices seem to be more stable at present. Therefore, industry experts expect demand and inventory levels will normalize soon. On the other hand, the polyester markets in North America entered the high sales season with great strength, allowing demand to grow at an estimated annual rate of 3% in the first half of the year. Demand in the plastics and chemicals industry in North America was particularly strong in sectors serving the food, consumer products, construction and automotive industries. Prices follow the global downward trend of crude oil and petrochemical feedstocks, but margins remain stable. On the other hand, sectors serving Asian markets, particularly China, observed reductions in sales volume and margins. Operations Polyester and Polyester products (PTA, PET, polyester fibers 78% of Alpek s total revenues in 2Q12) Alpek s polyester value chain business had a strong performance during 2Q12 and sales volume grew 7% compared to 2Q11. This achievement is explained by the strength of demand in North America, plus additional output at the PET plant in Columbia and the contribution of the PET facility in Pearl River, which was acquired last August. On a cumulative basis, sales volumes grew 9% in 1H12 as compared to 1H11, for the same reasons. Due to the strength of demand, Alpek has been able to keep its PET and PTA plants running close to and above 90% rate, respectively. The price of the polyester chain products declined 2% year-on-year due to lower raw material prices. As explained in past reports, Alpek sells most of its polyester products following cost-plus formulas, so changes in the cost of raw materials are passed through to customers without a major impact on profitability. On a cumulative basis, 1H12 prices were 1% above last year s. Second Quarter 2012 July 16, 2012 2
Plastics and Chemicals (Expandable Polystyrene (EPS), Polypropylene (PP), Caprolactam (CPL), other products 22% of Alpek s total revenues in 2Q12) Sales volumes declined by 5% year-on-year, with the decrease coming from lower volumes in Alpek s trading business of commodity chemicals and also lower exports of caprolactam to China. On the contrary, the polypropylene business was able to sell 31% more product than the year before, on account of a better supply of propylene from PEMEX refineries, plus higher imports of propylene, leveraging Alpek s specialized Altamira port facilities. However, the increase in polypropylene sales volume was not enough to offset the decline produced by traded commodity chemicals and caprolactam. On a cumulative basis, this business segment remained at the same volume level than the year before. Regarding prices, a 10% decline was observed in 2Q12 vis-à-vis 2Q11, which is the effect of lower raw material prices, triggered by the declining oil prices and petrochemical feedstocks already explained. On a cumulative basis, prices declined 6% for the same reasons, with caprolactam being the product most affected by this reduction. Financial Results Alpek s 2Q12 revenues amounted to U.S. $1,913 million, up 1 % from 2Q11. While the polyester value chain reported higher sales volumes, it was not enough to offset the effect of lower prices and volumes at the plastics and chemicals segment. On a cumulative basis, Alpek sold U.S. $3,809 million in 1H12, up 7% from 1H11 due to the strength of the polyester chain. 2Q12 EBITDA reached U.S. $201 million, 3% lower than 2Q11 but in line with company guidance. The year-onyear decrease in EBITDA is the result of lower caprolactam sale volumes and margins, plus the fact that 2Q11 EBITDA reflected extraordinary gains in the polyester business (see below). On a cumulative basis, Alpek s 1H12 EBITDA amounted to U.S. $396 million, 3% higher than 1H11. During 2Q12, Alpek obtained majority net income in the amount of U.S. $82 million, 14% lower than 2Q11. Below the operating income line, Alpek reported a negative CFE, which reduced the net result. CFE increased due to the 15% peso depreciation and on account of lower commodity prices that support the hedging strategy. On a cumulative basis, Alpek s majority net income was U.S. $160 million 1H12, a 20% reduction when compared to 1H11, for the same reasons. Second Quarter 2012 July 16, 2012 3
Financial Results by Business Segment Polyester and Polyester products: 2Q12 Revenues amounted to U.S. $1,496 million, up 5% from 2Q11 mainly reflecting higher sales volumes. For the first half of the year revenues amounted to U.S. $ 2,991 million, which represented an 11% gain over 1H11, for the same reason, and also higher prices. EBITDA for the quarter was U.S. $144 million, down 1% year-on-year. The year-on-year comparison is more difficult as Alpek s 2Q11 results carried extraordinary revenues brought about by a force majeure problem faced by a competitor that lasted until the end of 3Q11. Also, at the beginning of 2012 the PTA industry adjusted prices downwards to keep the North American market in line with global market dynamics. The above notwithstanding, 2Q12 EBITDA remained at the same level year-on-year, clearly showing the favorable impact of higher volumes and lower costs. Year-to-date, this segment s EBITDA amounted to U.S. $283 million, up 3% from 1H11, basically for the same reasons. Plastics and Chemicals: This business segment reported 2Q12 revenues in the amount of U.S. $417 million, a 10% decrease year-onyear, due to the changes in volumes and prices already explained. For the first half of the year, revenues amounted to U.S. $817 million, down 4% when compared to 1H11, for the same reasons. 2Q12 EBITDA was U.S. $57 million, down 6% when compared to 2Q11. The decrease in EBITDA is basically explained by lower caprolactam margins and exports to China. On a cumulative basis, 1H2 EBITDA was U.S. $114 million, up 3% when compared to 1H11. Chemical products margins were higher during 1H12 than in 1H11, helping EBITDA. Second Quarter 2012 July 16, 2012 4
Capital Expenditures and Net Debt During 2Q12, Alpek invested U.S. $27 million in capital expenditures (Capex). Half of the funds were used for strategic growth projects and the other half for mandatory Capex. Alpek continued with the construction of a cogeneration plant in the PTA/PET complex in Cosoleacaque, Veracruz, Mexico. It will start up at the beginning of 2014. This project involves an estimated Capex of U.S. $130 million. Once in operation, it will bring significant benefits to the company in terms of savings in energy costs and revenues from the sale of the electricity surplus generated in the process. Also, resources were used to start capacity expansions in the Columbia and Pearl River sites with marginal investments. These debottlenecking projects will start up in 4Q12. This quarter, Alpek reinforced its financial condition with the proceeds of the placement of its shares in the Mexican Stock Exchange and international markets under Rule 144A and regulation S. It raised the equivalent of U.S. $795 million, of which U.S. $ 219 million were used to repay an outstanding debt to Alfa that resulted from Alpek s corporate reorganization prior to its IPO. Also, Grupo Petrotemex, Alpek s largest subsidiary, has initiated a tender offer to repurchase its 2014 Unsecured Senior Notes. The remaining funds will be used to finance several investments projects the company is currently contemplating. Financial ratios at the end of 2Q12 were: Net Debt to LTM EBITDA of 0.8 times and Interest coverage of 7.8 times. Second Quarter 2012 July 16, 2012 5
FINANCIAL INFORMATION CONSOLIDATED AND GROUP TABLES CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF INCOME FOR MORE INFORMATION AND THE SPANISH VERSION OF THIS REPORT, VISIT ALPEK S WEBPAGE AT RAÚL MILLARES N. +52 (81) 8748 1395 RMILLARES@ALPEK.COM SABINO PARRA B. +52 (81) 8748 1358 FSPARRA@ALPEK.COM Second Quarter 2012 July 16, 2012 6
TABLE 1 VOLUME (KTONS) 2Q12 vs. YTD'12 vs. 2Q12 1Q12 2Q11 1Q12 2Q11 YTD'11 vs. Volume 1,041 1,021 994 2 5 7 Polyester and polyester products 846 817 788 4 7 9 Plastics and Chemicals 195 205 206 (5) (5) (0) TABLE 2 PRICE CHANGES (%) 2Q12 vs. YTD'12 vs. 1Q12 2Q11 YTD'11 vs. Polyester and polyester products Avg. Ps. Prices (1) 13 13 Avg. U.S. $ Prices (3) (2) 1 Plastics and Chemicals Avg. Ps. Prices 4 4 5 Avg. U.S. $ Prices 1 (10) (6) Total Avg. Ps. Prices 2 11 11 Avg. U.S. $ Prices (1) (3) (0) TABLE 3 REVENUES Total Revenues Ps. Millions 25,729 24,829 22,062 4 17 50,558 42,381 19 U.S. $ Millions 1,913 1,896 1,887 1 1 3,809 3,560 7 Domestic Revenues Ps. Millions 9,231 8,815 8,855 5 4 18,046 17,162 5 U.S. $ Millions 687 674 757 2 (9) 1,361 1,442 (6) Foreign Revenues Ps. Millions 16,498 16,014 13,207 3 25 32,512 25,219 29 U.S. $ Millions 1,226 1,222 1,130 0 9 2,448 2,118 16 Foreign / Total (%) 64 64 60 64 60 Second Quarter 2012 July 16, 2012 7